The Kremlin’s Perfect Storm

By early May, Putin’s regime appeared to be facing a perfect storm: a battlefield stalemate, economic stagnation, and a visibly faltering state response to crises ranging from flooding in Dagestan to a foot-and-mouth outbreak in Siberia. At the same time, the Kremlin intensified mobile-internet blackouts and expanded efforts by the security services to tighten control over social media.

Even more striking were unusually critical remarks from normally Kremlin-friendly public figures, including the video blogger Viktoria Bonya and the rapper Guf — a possible sign of growing frustration among parts of the elite and segments of Russian society that had previously remained politically disengaged. Meanwhile, Western media outlets have been flooded with reports of collapsing approval ratings for Putin and even speculation about a possible conspiracy against him. Putin himself has responded with repeated assurances that internet restrictions are “temporary” and that the war is “drawing to a close.”

Does any of this point to a genuine crisis for the Russian regime?

Indeed, the first half of 2026 brought rising inflation and a noticeable decline in living standards. By now, the effects of what some economists have called “war Keynesianism” — growth fueled by massive state spending — appear to have largely run out. During the first two years of the war, the share of Russians earning more than $1,000 a month doubled, from 5 percent to 10 percent. But the Ministry of Economic Development now forecasts wage growth of just 2 percent for 2026, below the government’s official inflation target of 5 percent. As a result, household incomes are effectively falling in real terms.

At the same time, the federal budget deficit has continued to widen, reaching 2.5 percent — already well above the government’s planned ceiling of 1.6 percent for the year. As the Kremlin continues to spend billions of rubles on the war effort, it has few options for closing the gap other than raising taxes and cutting social spending.

The deepening economic crisis is eroding the myth of “Putin’s stability,” but it cannot necessarily lead to mass protest. As in the 1990s, during the so-called market reforms, when most Russians were struggling to get by, the decline in living standards is likely to fuel even greater political apathy and disengagement.

Unlike the Yeltsin era, however, the cause of today’s hardship is clear to everyone: the ongoing war of aggression in Ukraine. Attacks by Ukrainian drones, which have become particularly intense in recent months, make it impossible to ignore the reality of this war—or the fact that Russia is clearly not winning it. The gap between the Kremlin’s perception of events and that of ordinary Russians is widening rapidly.

Recently, Kremlin spokesperson Peskov stated that the withdrawal of the Ukrainian army from the Donetsk region is not a matter for possible negotiations with Kyiv, but a precondition for them. 

In other words, once Ukraine voluntarily cedes part of its territory, further demands are likely to be made. It is clear that the Kremlin is not interested in a ceasefire and is planning a major offensive in the Donbas this summer and fall. The aim of this offensive is not only military but also political – it is necessary to convince Trump that Russia continues to dominate on the battlefield, and therefore the US must increase pressure on Kyiv, forcing it to accept the Kremlin’s terms.
Putin’s plan clearly highlights a conflict between his personal ambitions and the interests of the Russian people. The Russian army’s losses on the front line have reached their highest level this year – for example, in the second half of April alone, around 4,500 soldiers were killed (in total, at least 350,000 Russians have died over the five years of the war). The number of civilian casualties is also rising due to Ukrainian missile strikes on military and energy infrastructure (though this is completely incomparable to the casualties of Russian strikes on Ukrainian cities). 

Increased repression and government attempts to restrict the flow of information are an answer to the growing discontent. Whereas previously the regime largely enjoyed legitimacy among the population as a guardian of the stability of everyday life, it now relies more and more on fear of the police and secret services. In this sense, Putin may be moving towards the Iranian model, where a regime that does not enjoy the support of the majority retains power through violence.

‍
As for the mood among the political and business elite, they are, of course, dissatisfied with the endless continuation of the war, the economic downturn, internet restrictions, and the growing power of the security services. However, contrary to the rumours being spread by a range of Western media outlets, there is not a conspiracy brewing against Putin. 

This is the case for a few reasons. First, the fear of repression among the elite makes them divided and suspicious. It is worth recalling that over the past year, the number of arrests of government officials has risen sharply: dozens of employees of the Ministry of Defence (including several former deputies to Minister Sergei Shoigu) have been arrested, as well as representatives of other departments. In 2024, Transport Minister Roman Starovoit committed suicide due to the threat of arrest, whilst Deputy Minister of Natural Resources Denis Butsaev fled to the US. Several prominent businessmen suspected of political disloyalty have lost their property and their freedom (for example, this happened to Vadim Moshkovich, the owner of one of the country’s largest agricultural companies) 

Second, the agenda and prospects of such a conspiracy are unclear in the current circumstances, as this elite has no common clear vision of an alternative foreign policy direction or conditions for ending the war.

Finally, Putin’s disappearance could trigger large-scale conflicts within the Russian elite over control of property. Having destroyed all the country’s political institutions over the 25 years of his rule, Putin himself has become the sole factor maintaining a relative balance of interests within the ruling class. And that is why the elite fears his departure more than the continuation of his destructive military adventures.